Merrimack (MACK) Incurs Narrower-Than-Expected Loss in Q4

Merrimack Pharmaceuticals, Inc. MACK reported a loss of 89 cents per share in the fourth quarter of 2017, narrower than the Zacks Consensus Estimate of a loss of $1.27. The company reported a loss of $2.93 in the year-ago quarter.

Merrimack sold Onivyde and a generic version of Doxil to Ipsen in April 2017. Merrimack did not generate any revenues in the quarter as there was no marketed product.

Merrimack’s shares lost 10.3% following the release of fourth-quarter results. Shares of Merrimack have underperformed the industry so far this year. The stock tumbled 25.7% in the last six months while the industry declined 7.7%.

In the quarter, research and development expenses were down 51.6% year over year to $12.4 million due to Merrimack's refocused clinical and preclinical pipeline.

General and administrative expenses were down 57.3% year over year to $4.7 million due to reduced headcount levels and stock-based compensation

2017 Results

Loss per share for 2017 came in at $5.66 compared with $12.33 in 2016.

Pipeline Updates

With the sale of its only marketed product, the company can now focus its resources on the development of its three pipeline candidates — MM-121/seribantumab (heregulin-positive, locally advanced or metastatic non-small cell lung cancer ("NSCLC"), MM-141/istiratumab (pancreatic cancer) and MM-310 (solid tumor).

Data from the phase II CARRIE study, evaluating MM-141 in pancreatic cancer, is expected in the first half of 2018. MM-310 is being evaluated in a phase I study in solid tumors. Safety data and maximum tolerated dose is expected to be announced in the second half of 2018.

The company is conducting a phase II study, SHERLOC on MM-121 in non-small cell lung cancer. Enrollment in the study has been expanded to 100 from 80. Top-line data from the study is expected in the second half of 2018. In November 2017, the FDA granted orphan drug designation to the candidate for the treatment of heregulin-positive non-small cell lung cancer.

Merrimack announced that the first patient has been also dosed in phase II study, SHERBOC, for evaluating MM-121 in HER2 negative metastatic breast cancer.

Outlook

Per the company, cash and cash equivalents of $93.4 million as of Dec 31, 2017 and potential net milestone payments anticipated from Shire SHPG will be sufficient to fund its planned operations into the second half of 2019.

Our Take

The narrower-than-expected loss in the fourth quarter was due to lower expenses. We expect investor focus on pipeline updates from the company.

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